The International Monetary Fund (IMF) has slashed its 2022 growth forecast for sub-Saharan Africa region significantly due to the impact of the global economic downturn.
The IMF on Friday said that sub-Saharan Africa’s economic activity was expected to slow significantly in 2022 and remain relatively modest in 2023.
According to the IMF, the region is expected to grow by 3.6% in 2022, down from 4.7% in 2021, due to muted investment and the overall worsening of its balance of trade.
Releasing the Regional Economic Outlook for Sub-Saharan Africa report, IMF’s director for African Department Abebe Aemro Selassie said the outlook also remained highly uncertain.
Selassie said a downturn in advanced economies and emerging markets, tighter financial conditions, and volatile commodity prices, have undermined last year’s gains.
Consequently, Selassie said that countries in the region were living on the edge.
“Late last year, sub-Saharan Africa appeared to be on a strong recovery path out of a long pandemic,” Selassie said.
“Unfortunately, this progress has been abruptly interrupted by turmoil in global markets, placing further pressures on policymakers in the region.”
The IMF’s forecast is in line with the World Bank’s which, earlier this month, warned that economic growth in the region was set to decelerate from 4.1% in 2021 to 3.3% in 2022, a downward revision of 0.3 percentage points from April’s forecast.
In its biannual publication Africa’s Pulse, the World Bank also flagged slowdown in global growth, including flagging demand from China for commodities produced in Africa, as the main reason for subdued growth in sub-Saharan Africa.
Meanwhile, the IMF said that non-resource-intensive countries, which enjoy a more diverse economic structure, will continue to be among the region’s more dynamic and resilient economies, growing by 4.6 percent in 2022, compared to 3.3 percent in oil exporters and 3.1 percent in other resource-intensive countries.
The report said the cost-of-living squeeze due to elevated inflation has pushed millions of people into acute food insecurity and could weigh on economic growth and undermine social and political stability.
Public debt has reached about 60% of GDP, leaving the region with debt levels last seen in the early 2000s.
Against this backdrop, Selassie pointed to four priorities for policymakers in the region, including tackling food insecurity, consolidating public finances, containing inflation, and setting the stage for high-quality growth.“On our side, we have been supporting sub-Saharan Africa with close to $50 billion since the beginning of the pandemic,” Selassie said.
“We are also helping catalyse new capital inflows by boosting local capacity and expanding our lending facilities with our new Resilience and Sustainability Trust to provide affordable financing to address longer-term structural challenges.
“With help, sub-Saharan Africa will be poised to fulfil the promise of the African century, contributing to a more prosperous, greener future for the region and the world.”
BUSINESS REPORT